Further restrictions on cheque payments to SARS
01 August 2014
Posted by: Author: Mike Betts
Author: Mike Betts (Grant Thornton)
The advent of electronic payment facilities has drastically reduced the use of cheques as a means of payment and for various reasons, mainly relating to security concerns, SARS has gradually introduced measures designed to discourage cheque payments.
This initiative was intensified on 30 May 2014 when SARS issued a notice that affects anyone who is not using e-filing to make payments to them. Under the new stipulations, unless requested otherwise by a senior SARS official:
- Taxpayers who have had two or more cheque payments to SARS returned as ‘refer to drawer’ in the past three years, will not be permitted to pay SARS by cheque in future.
- All payments must be supported by a SARS payment advice notice (PAN) that is less than seven days old (see further explanation below).
- A separate cheque is required for each tax type, with the exception of payroll related taxes for which one cheque combining the payment of PAYE, SDL and UIF will be acceptable, subject to the monetary limit indicated below.
- The aggregate daily limit for cheque payments at any SARS branch or by post is R50,000 in respect of the following tax types:
- Estate duty
- Income tax, including administrative penalties, assessed tax, corporate income tax, dividends tax, provisional tax and turnover tax
- Mineral and petroleum resources royalties
- Mining royalties
- Other mining leases
- Employees tax, including PAYE, SDL and UIF
- Value added tax
- Withholding tax on royalties
5. Cheque payments of up to R500,000 will however, still be permitted in respect of the following tax types:
- Donations tax
- Amounts withheld from payments to non-resident sellers of immovable property
- Assessed tax payable by non-resident owners or charterers of ships or aircraft.
These limits apply regardless of the number of tax periods and/or tax types that have to be accommodated on any one day. Therefore, for payments exceeding these amounts, taxpayers should use another payment method. If they are limited to cheque payment as the only option, they must commence the payment process well in advance to ensure they settle the full amount due by the due date.
For tax types not specifically referred to above, cheque payments in excess of R500,000 will not be accepted in accordance with recognised banking practice. Securities transfer tax and transfer duty should be paid electronically via e-filing. There has been no change to the payment rules that apply to customs and excise tax – the only tax type for which cash payments are still accepted – provided payment is made at a Customs branch, and the payment amount is less than R 100,000 per cheque payment.
No instruction has yet been issued regarding withholding taxes in respect of interest and service fees paid to non-residents. Unless this is clarified before 1 January 2015 when the withholding tax on interest comes into effect, taxpayers are advised to adopt the limits applicable to dividends tax and withholding tax on royalties, as indicated above. The withholding tax on service fees is effective from 1 January 2016.
Cheque payments can be made at any SARS branch between 08:30 and 15:30 on weekdays (08:00 to 15:00 at a Customs branch) or by depositing a cheque, together with the relevant supporting documents, in a drop box before 15:00 on any business day. Where more than five different cheque payments are required, the drop box facility MUST be used. Where cheque payments are submitted by post, adequate allowance must be made for postal delays.
Introduction of payment advice notice (PAN)
From 24 May 2014 all payments to SARS by cheque, direct bank deposit or by way of electronic funds transfer (EFT) must be supported by a new form of remittance advice known as a PAN, which bears the 19 digit SARS payment reference that ensures payments are allocated to the correct account.
Payments made via e-filing on the credit push method will not be affected by this change. The notification by SARS advising taxpayers of the new requirement indicates that for over the counter payments at a bank and EFT payments, the necessary PAN can be obtained via the e-filing system. No information is provided as to how a PAN can be obtained by taxpayers who do not have access to e-filing. Contact Grant Thornton for help to obtain a PAN.
This article first appeared on gt.co.za.